Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 2.36 billion yuan, an increase of 22.4% year on year; realized net profit of 140 million yuan, an increase of 40.7% year on year; realized deducted non-net profit of 140 million yuan, an increase of 47.2% year on year. Looking at a single quarter, Q4 achieved revenue of 670 million yuan, an increase of 27.5% year on year; realized net profit of 40 million yuan, an increase of 56.3% year on year; realized net profit of 40 million yuan after deduction, an increase of 111.6% year on year. In 2023, the company's cash dividend was 478.66 million yuan, with a cash dividend ratio of 53%. In addition, the company used the capital reserve fund to transfer 3 shares for every 10 shares to all shareholders. In 2024, Q1 achieved revenue of 440 million yuan, a year-on-year decrease of 0.9%; realized net profit of 0.2 billion yuan, a year-on-year decrease of 4.7%.
Export sales have continued to grow at a high rate, and showcases are under pressure. By product, in 2023, the company's refrigerators/commercial display cases sold 1.026 million units/38,000 units, respectively, and achieved revenue of 2.16 billion yuan/170 million yuan respectively, up 27.7%/-19.6% year on year; by region, domestic and foreign sales achieved revenue of 1.78 billion yuan/580 million yuan, respectively, +13.7%/60.1% year-on-year. The company actively explores overseas customers and improves the company's revenue structure. It is expected that export sales will continue to maintain a relatively rapid growth trend in the future.
The gross margin of refrigerators increased significantly, leading to an improvement in net profit margins. The company's gross margin in 2023 increased 1.2pp to 13.5% year on year, with the gross margin of refrigerators increased by 1.3pp to 12.4% year on year; by region, the company's gross margin for domestic and foreign sales in 2023 was 12.4%/16.7%, respectively, +1.1 pp/+0.4pp. We speculate that the improvement in domestic sales gross margin mainly came from product structure upgrades, while the increase in the share of export sales led to an increase in overall gross margin; in terms of cost ratio, the company's sales/management/ financial/ R&D expenses ratio in 2023 was 1%/2.1%/ -0.2%/3.4%, +0.1pp/-0.2pp, respectively. Among them, the increase in sales expenses was due to the company's increased market development efforts, and the overall cost ratio remained stable; the net interest rate increased by 0.8 pp to 6% year over year, and the increase in net interest rate was mainly due to improvements in gross margin.
The 24Q1 issuance fee increased the management rate, and gross margin fluctuated during the off-season. The company's Q1 gross margin decreased by 0.9pp to 11.6% year-on-year in 2024. In terms of cost ratios, sales/management/finance/R&D expense ratios were 1%/3.5%/-0.7%/4.2%, respectively, compared to -0.1 pp/+1.3 pp/ -1.2 pp/ +1.1 pp, respectively. The increase in management expenses was mainly due to an increase in the amount of paid issuance expenses. The increase in the amount of interest income led to a significant decrease in financial expenses. Overall, the company's expense ratio increased. Looking at net interest rates, the company's net interest rate decreased by 0.2pp to 4% year-on-year in Q1 in 2024. Q1 is the company's traditional low season, and a single order has a big impact. We believe that fluctuations in gross margin may be due to changes in product structure in a single quarter.
Profit forecasting and investment advice. The company focuses on the large-volume refrigerator circuit. As an industry leader, the company continues to invest in R&D to consolidate its advantages, promote product upgrades and overseas expansion to achieve continuous improvement in profitability. The company's 2024-2026 EPS is expected to be 1.34 yuan, 1.66 yuan, and 2.01 yuan respectively, maintaining the “hold” rating.
Risk warning: Risks such as export sales growth falling short of expectations, customer expansion falling short of expectations, and increased competition.